Holding the stretch: digital transformation in times of disruption

‘Stretch’ is the new normal

In the past, business leaders set goals that were SMART: Specific, Measurable, Achievable, Relevant, and Time-Bound. And for many organisations, this process worked well. Many goals, given the right capabilities, resources, and support, could be achieved, as the ‘A’ in the acronym suggests.

But the world has changed. SMART goals now lack ambition and are considered too run-of-the-mill to reflect a modern high-performance culture. Leaders are being asked to think bigger, to aim for extraordinary outcomes, and to create step-changes in their businesses. The word ‘stretch’ has replaced SMART in the goal-setting lexicon, generating targets that often seem well beyond current possibilities.

Major organisational change is not something that rears its head every few years, but is now a continuous feature of business. ‘Stretch’ is becoming business-as-usual. And you can see why. Shareholders demand more from their investments. Staying competitive on the global stage is growing harder as global supply chains make our goods more expensive. And let’s not forget that organisations with ambitious goals can generate a halo effect – they carry kudos, draw in ambitious and driven people, and promote the positive intent of the business.

And as the headwinds of recession grow, the ‘stretch’ being demanded of business leaders is likely to be greater than ever.

Most New Zealand businesses are ‘stretching’ into digital transformation

The Covid-19 pandemic changed the way we work and the way we relate to digital technology. The ability for people to shift from face-to-face experiences to the online world has given businesses greater confidence than ever that they can ‘become more digital’. Some are seeking to improve their customer experience. Others to increase their operational effectiveness. And still others are looking to create fresh ecosystems of value-adding propositions for their customers. What once seemed like a risky pipedream now feels a realisable goal.

According to our recent CEO Outlook survey, it seems like New Zealand is jumping on the digital bandwagon. Over three-quarters (77%) of New Zealand CEOs recognise the need to shift investment to digital opportunities, to bolster their teams with greater digital expertise, to be bolder in in their approach to digital transformation, and to focus more on how digital capabilities can boost productivity.

And it seems like most of New Zealand’s businesses are not aiming low. When asked about their digital commitments, most New Zealand CEOs know that they need to be in ‘stretch’ mode. 80% of those surveyed say that their digital investment strategy is aggressive, and that they are aiming to secure first-mover or fast-follower status. Few Kiwi businesses are adopting a pedestrian approach to digital change. Directors can often be even more exposed, sitting across multiple organisations factoring ‘digital’ into their targets.

But New Zealand CEOs are not confident they are going to make digital change stick

While New Zealand’s digital ambition is large, and the direct and indirect benefits are recognised as significant, there is a conundrum. Most NZ CEOs are not confident that digital transformation is going to have the impact they desire. As many as three-quarters of our local leaders ‘strongly believe’ that getting their employees to adopt and sustain new ways of working will be a ‘significant challenge’.

Directors should be conscious of these concerns. 60% of those surveyed also indicated that managing risk and compliance, and measuring and reporting the benefits, were considerably holding back business transformation. Business leaders in New Zealand are increasingly recognising that embracing digital is not a one-off project managed by IT; transformation that results in a more efficient, competitive and customer-centric business needs to be appropriately directed and governed by the Board and C-suite.

So how can CEOs ‘stretch’ themselves for successful digital transformation?

Stephen Covey’s maxim of “beginning with the end in mind” is as valid today as it’s always been. While agile working allows us to adapt on the way, without the fundamentals of a clear goal, a purpose, and an approach, any transformation is at risk of being de-railed.

Business leaders who find success tend to follow a similar playbook:

They look for cost savings and revenue uplift: Organisations that balance both cost savings and new revenue opportunities from digital transformation have a better chance of transforming successfully and positioning themselves for growth.

They resource change properly: Successful organisations often create new roles and responsibilities specifically for a transformation. If you can’t free up the right talent, or access it externally, even the best planned programmes are at risk.

They make data-driven plans: Leaders set ambitious, yet realistic goals based on both internal and external analysis. They used fact-based information on their own organisation, their industry, and emerging trends to lay the groundwork for their plans and ambitions.

They understand which levers they can pull: CEOs need to understand which levers of change are critical to their future success. Whether it is the scope, the timing, or the quality of outcome, they need to know what can give, and what cannot, to create the outcomes that they need. Being determined to have no flexibility across the key levers of change might seem bold, but it is usually a recipe for failure.

Implementing digital transformation is a challenge that requires detailed planning, dedicated resources, and commitment to the outcome from our people at all levels.

Organisations in every industry fear becoming stagnant or perhaps even obsolete. As history repeatedly shows us, times of disruption ignite innovation. So now is the time to stretch into transformation. 

About the author

James Dowle is a senior leader in KPMG's national advisory practice with over 25 years top-tier UK and New Zealand experience of delivering technology-based change in major banks and the public sector.

He has particular expertise in the design and mobilisation of delivery-focused business transformation programmes, James creates success through a clear vision for any change, strong communication and resolute pragmatism, alongside building highly collaborative teams and generating a passion for success.

He has held leadership roles across a number of complex core system replacement programmes and has led integrated business process change programmes from business case through to execution.